SINGAPORE shares traded in negative territory on Thursday (Dec 19) afternoon, tracking broader losses in Asia after the US Federal Reserve signalled fewer interest rate cuts next year.
As at 3.45 pm, the Straits Times Index (STI) fell 0.5 per cent or 19.72 points to 3,759.90. Across the broader market, losers outnumbered gainers 332 to 162 after 758.4 million securities worth S$692.1 million changed hands.
Yeo Hiap Seng shares were down 0.9 per cent in the afternoon after it announced it had retrenched 25 employees, as a result of Oatly’s decision to cease its manufacturing operations in Singapore. The affected employees had been hired to support Oatly’s production at Yeo’s Senoko plant, it said.
The three banks fell in the afternoon – DBS lost 0.07 per cent, OCBC was down 0.7 per cent, while UOB traded 0.2 per cent lower.
The US Federal Reserve had announced that it cut its benchmark interest rate by a quarter point, but also slashed the number of 2025 rate cuts in its forecast from four to two. Analysts, however, remained optimistic on the outlook for both Singapore and Asia markets.
“We maintain that the timing and size of the US Fed’s interest rate decreases, as well as the prospects for global economic growth, will have a stronger influence on Singapore’s equities market,” RHB said in a note before the Fed decision.
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“Although the easing of the interest rate cycle should ideally be negative for banks – as we expect global and Singapore economic growth to remain positive – the impact of the easing cycle should be manageable for local banks,” it added.
Singapore real estate investment trusts (S-Reits) fell sharply in the afternoon despite the rate cut. Mapletree Industrial Trust, Frasers Hospitality Trust, and Acrophyte Hospitality Trust fell more than 2 per cent each.
RHB said that investors should gradually build positions in the Reits sector as interest rates are expected to eventually decline.
“Looking ahead to 2025, we expect a better year for S-Reits compared to 2024, as interest rates have started to descend from their peaks coupled with steady economic growth.
“Nonetheless, we expect some volatility and short-term fluctuations in share prices during the course of the year, resulting from political and policy uncertainties,” said RHB. “We expect the S-Reit sector’s DPU growth to turn positive (rising 2.7 per cent year on year) in 2025.”
Broader Asian equity markets were also lower – Japan’s Nikkei 225 slid 0.7 per cent, while Australia’s ASX 200 dropped 1.7 per cent and Hong Kong’s Hang Seng index was down 0.4 per cent.
